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The share price of Matson, Inc. (NYSE:MATX) has increased significantly over the past few years. However, the earnings growth has not kept up with the share price momentum, suggesting that some other factors may be driving the price direction. Some of these issues will occupy shareholders' minds as the AGM rolls around on 22 April 2021. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.
Comparing Matson, Inc.'s CEO Compensation With the industry
Our data indicates that Matson, Inc. has a market capitalization of US$3.0b, and total annual CEO compensation was reported as US$5.5m for the year to December 2020. We note that's an increase of 22% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$689k.
For comparison, other companies in the same industry with market capitalizations ranging between US$2.0b and US$6.4b had a median total CEO compensation of US$4.2m. This suggests that Matt Cox is paid more than the median for the industry. Moreover, Matt Cox also holds US$19m worth of Matson stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, around 22% of total compensation represents salary and 78% is other remuneration. Matson sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at Matson, Inc.'s Growth Numbers
Over the last three years, Matson, Inc. has shrunk its earnings per share by 5.9% per year. Its revenue is up 8.2% over the last year.
Overall this is not a very positive result for shareholders. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Matson, Inc. Been A Good Investment?
We think that the total shareholder return of 149%, over three years, would leave most Matson, Inc. shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 4 warning signs for Matson you should be aware of, and 1 of them is concerning.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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